03 Dec How Retaining Donors Can Save Your Nonprofit Money

Oftentimes, nonprofits and charities focus heavily on attracting new donors. In fact, according to data compiled by The Association of Fundraising Professionals (AFP) and The Urban Institute on fundraising effectiveness, nonprofits and charities experienced a net growth-in-giving (as in new donations) of roughly $106 million in 2014. However, attracting new donors takes a great deal of work, and many nonprofits simply don’t have the time or resources to both attract new donors and keep existing ones engaged. In many cases this leads to existing donors falling to the wayside. In fact, despite the positive growth last year, Donor Perfect notes that 92 percent of the gains were offset by losses of existing donors who either reduced their gift or simply stopped giving. In other words, every time a nonprofit raised $100 last year, $92 of it simply vanished, and for every 100 new donors, 102 previous ones were lost.

This means that nonprofits throughout the country are letting steady sources of revenue disappear! While attracting new donors is important, in order to increase monetary gains on an overall basis, it’s critical that nonprofits retain current and previous ones. As Donor Perfect notes, the AFP reported in 2014 that the average retention rate for a nonprofit donor in the US was around 39 percent—that’s simply too low. Existing donors can act as a steady source of revenue, which can be especially useful when a nonprofit has some difficulty pulling in new donors—in other words, nonprofits throughout the U.S. are missing an opportunity to increase their monetary resources.

There are a number of ways that nonprofits can hang on to existing donors. For one, they can offer examples of gratitude—such as small gifts or thank you cards—for every donation they make. Nonprofits can also notify existing donors how their donations were used, so that these donors can gain a better understanding of how they’re affecting change. Also, nonprofits can offer competitive benefits to longtime donors, such as discounts on products or tickets to local events.

However, one of the best ways to retain donors is to create some kind of monthly giving program. Donor Perfect suggests that, in order to improve a nonprofit’s donor retention rate, a nonprofit should consider starting a monthly giving program. In fact, the AFP noted for 2015 that the average retention rates have climbed to 43 percent, thanks to a number of nonprofit organizations implementing monthly giving programs. But what exactly are these programs?

A monthly giving program basically involves having donors give a certain amount each month. The amount can even be relatively small, but this type of program helps an organization to establish a relationship with a donor, and it also allows a donor a bit of financial flexibility. They no longer have to fret about donating whatever they can, whenever they can. Instead, they can set aside a certain portion of their income for charity, which can help them establish a sense of financial security.

If a nonprofit wants to increase its total gains, it’s vital that they do whatever it takes to keep existing donors safely secured within their donation pool. With a little extra effort, a nonprofit can increase its donor pool dramatically, and therefore boost its overall donation rates.

Shabab Gruberg is the CEO and President of Good360. He developed the largest online product philanthropy platform, GivingPlace, connecting charities, companies, and people who care. Think 4 million diapers, 10,000 mattresses, and 8,000 cartons of apparel in 2014 alone. His passion is solving problems, and there is no problem too big or small. He has consulted over 150 nonprofits, optimizing their business development, developed a system and process to take off-line medical offices online over a weekend, and spent years teaching community college students Linux.

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Good360’s mission is to transform lives by providing hope, dignity, and a sense of renewed possibility to individuals, families, and communities impacted by disasters or other challenging life circumstances who, without us, would struggle to find that hope.​